Ch. 554

LAWS OF MARYLAND

BY repealing

Article - Tax - General
Section 10-205(d)
Annotated Code of Maryland

(As enacted by Chapter ____ (S.B. 1) of the

Acts of the General Assembly of 1988)

BY adding to

Article - Tax - General
Section 10-205(d)
Annotated Code of Maryland

(As enacted by Chapter ____ (S.B. 1) of the

Acts of the General Assembly of 1988)

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That the Laws of Maryland read as follows:

Article 81 - Revenue and Taxes

280.

(b) There shall be added to federal adjusted gross income:

[(6) The ordinary income portion of a lump-sum
distribution allowable as a deduction from federal adjusted gross
income under § 402(e)(3) of the Internal Revenue Code, and to the
extent treated as ordinary income, 40 percent of the capital gain
portion of the distribution as provided in § 402(a)(2) of the
Internal Revenue Code, and giving effect to § 402(e)(1)(D) of the
Internal Revenue Code;]

(6) TO THE EXTENT NOT INCLUDED IN FEDERAL ADJUSTED
GROSS INCOME, 40 PERCENT OF THE CAPITAL GAINS PORTION OF A
LUMP SUM DISTRIBUTION AS DEFINED IN § 402(A)(2) OF THE INTERNAL
REVENUE CODE EFFECTIVE AS OF DECEMBER 31, 1986; AND THE BALANCE
OF THE LUMP SUM DISTRIBUTION AS DEFINED UNDER THE INTERNAL
REVENUE CODE REDUCED BY THE MINIMUM DISTRIBUTION ALLOWANCE UNDER
§ 402(E)(1)(C) OF THE INTERNAL REVENUE CODE;

(6) TO THE EXTENT NOT INCLUDED IN FEDERAL ADJUSTED
GROSS INCOME, THE AMOUNT BY WHICH THE TOTAL TAXABLE AMOUNT OF A
LUMP-SUM DISTRIBUTION EXCEEDS THE SUM OF 60 PERCENT OF THE
CAPITAL GAINS PORTION OF THE TOTAL TAXABLE AMOUNT AND THE MINIMUM
DISTRIBUTION ALLOWANCE. IN THIS ITEM, "LUMP-SUM DISTRIBUTION",
"MINIMUM DISTRIBUTION ALLOWANCE", AND "TOTAL TAXABLE AMOUNT" HAVE
THE MEANINGS STATED IN § 402(E) OF THE INTERNAL REVENUE CODE.
"CAPITAL GAINS PORTION" IS THAT PART OF THE TOTAL TAXABLE AMOUNT
THAT IS EQUAL TO THE PROPORTION THAT THE NUMBER OF CALENDAR YEARS
OF ACTIVE PARTICIPATION BY THE EMPLOYEE IN THE PLAN BEFORE

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